Decentralized Autonomous Organization

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A decentralized autonomous organization (DAO) , sometimes also called a decentralized autonomous corporation (DAC) , is an organization that is coded by a transparent computer program . The program is neither controlled by shareholders nor influenced by a central government. The record of the financial transaction and the program rules of a DAO are maintained on a blockchain . The exact legal status of this type of business organization is unclear.

A well-known example of venture capital funding was The DAO, which started crowdfunding $ 150 million in June 2016 and was instantly hacked by $ 50 million in cryptocurrency . This hack was reversed in the following weeks and the money was restored via a hard fork on the Ethereum blockchain. The decentralized rescue was made possible by a majority vote of the Ethereum community.

background

Decentralized autonomous organizations are characterized by the use of blockchain technology. They provide a secure digital ledger for tracking financial interactions over the internet. This is protected against forgery through trustworthy time stamps and the distribution of a distributed database. This approach eliminates the need to involve a mutually acceptable trustworthy third party in a financial transaction, thereby simplifying the transaction.

The costs of a blockchain-enabled transaction and the associated data reporting can essentially be offset by the elimination of both the trusted third party and the need for repeated recording of the exchange of contracts in different records. For example, the blockchain data could in principle and if regulatory structures allow it, replace public documents such as certificates and titles. Theoretically, a blockchain approach enables several users of cloud computing (data clouds) to enter into a loosely coupled collaboration via smart contracts .

Daniel Larimer proposed the concept of a "decentralized organized company" in a published article on September 7, 2013.

Vitalik Buterin suggested that after starting a DAO it could be organized to function without a manager's human interactivity, provided the smart contracts are supported by a Turing completeness. Ethereum, which is based on a blockchain and was launched on the market in 2015, meets this standard and thus enables DAOs. Decentralized autonomous organizations aim to be open platforms in which individuals control their identity and personal data.

Examples

DAOs lead to a decentralized economy. Tokens enable contributions to collective work, micropayments and tracking metrics to enable algorithmic measurements of contribution benefits.

The first DAO was Dash . Others are The DAO, Digix or Infinity Economics.

Products and services

Blockchain facilitates solutions based on the Hyperledger framework in accounting, supply chains, healthcare, gaming, human identity, finance, medical marijuana and other industries.

Problems

It can be difficult for a DAO to keep an attorney or get a written contract. Nobody in the company is interested in putting their names on agreements.

society

Getting shareholders involved in DAOs can be problematic. For example, BitShares has seen a lack of turnout because it takes time and energy to consider proposals.

Statutory Liability

The exact legal status of this type of business organization is unclear. Some similar approaches have been viewed by the US Securities and Exchange Commission as illegal offers of unregistered securities. Although unclear, a DAO can functionally be a corporation without legal status: a general partnership. This means potentially unlimited liability for the participants, even if the smart contract code or the DAO sponsors say otherwise. Known participants or participants connected between DAO and regulated financial systems may be targeted for legal enforcement or civil action.

safety

A particular DAO's code will be difficult to change once the system is up and running. This includes bug fixes that would otherwise be trivial in the central code. Corrections for a DAO would require the creation of a new code and consent to migrate all funds. Although the code is visible to all, it is difficult to repair, leaving known vulnerabilities open to exploitation unless a moratorium is put in place to allow bug fixes.

In 2016, a special DAO, "The DAO", set a record for the largest crowdfunding campaign to date. The researchers pointed to several problems in the DAO's code. The operational process for the DAO allowed investors to withdraw any money that was not yet committed to a project at their convenience. The funds could thus be used up quickly.

Although measures to prevent gambling prevented shareholders from voting to receive investments, there were "a number of security holes". In mid-June 2016 this enabled an attempt to withdraw funds from the DAO. On July 20, 2016, the Ethereum community came to an amicable decision to force the Ethereum blockchain through hard fork in order to save the original contract.

See also

Web links

Individual evidence

  1. ↑ Narayan Prusty: Building Block Chain Projects . Packt, Birmingham, UK 27 Apr 2017, ISBN 9781787125339 , p. 9.
  2. ^ The Decentralized Autonomous Organization and Governance Issues Regulation of Financial Institutions Journal : Social Science Research Network (SSRN). 5 December 2017.
  3. ↑ Bitcoin moves beyond mere money . In: New Scientist . ( newscientist.com [accessed October 4, 2018]).
  4. ↑ The DAO of accrue . In: The Economist . ( economist.com [accessed October 4, 2018]).
  5. ↑ Rob Price: Digital currency Ethereum is cratering amid claims of a $ 50 million hack . In: Business Insider . June 17, 2016. Retrieved June 17, 2016.
  6. ↑ a b Hard Fork Completed ( en ) Ehereum Foundation. July 20, 2016. Retrieved September 27, 2018.
  7. ↑ What is a DAO? • Infinity Economics Platform. Retrieved October 4, 2018 (American English).
  8. ^ Over Paying for Security . In: Let's Talk Bitcoin .
  9. ^ DASH - The First Decentralized Autonomous Organization? (en) . In: Cointelegraph , September 12, 2015. 
  10. ↑ City academic makes link between cryptocurrency trading and machine learning (en) . In: City, University of London , May 29, 2018. 
  11. ^ R. Aitken: Digital Gold 'Done Right' With DigixDAO Crypto-Trading On OpenLedger . In: Forbes , April 23, 2016. 
  12. ↑ Home • Infinity Economics Platform ( en-US ). Accessed October 1, 2018.
  13. ↑ Augusta HiTech - Enterprise Blockchain Solutions. Accessed October 4, 2018 .